Your goals as an entrepreneur are not always clear. They may be centered on making a profit, which means a lot of decisions need to be made on prioritization. But your goals as an entrepreneur should also be centered on building a brand that can deviate from a script, and consider alternatives. 

“Real estate is a relationship business and at a time when most of our relationships exist through screens, it is more important than ever to have a tool that can enhance those interactions.” - @foundersnetwork
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Julie Leonhardt, co-founder and CEO of Vuse, believes that her understanding of the real estate industry, combined with her listening to the pain points of the agents with whom she speaks on a daily basis, has allowed her to create the perfect tool for the agents’ toolkit. Vuse is a mobile platform that enables real estate professionals to create and share captivating, pro-quality videos on the go. Her former life as the COO of Sotheby’s International Realty Affiliates, Inc. and the SVP of Affiliate Services and Head of Operations, EMERIA region, for Christie’s International Real Estate, and her partnership with award-winning filmmaker, Leanna Creel, creates the perfect team to build a product that the real estate market really needs right now.  

“Launching in March 2020 was definitely a risk,” Leonhardt explains. “However, once everyone realized that COVID was not going to be a minor blip on our year, my phone and email were blowing up with agents begging for Vuse. Vuse combines my real estate background with my co-founder, Leanna’s, amazing filmmaking acumen to create a product that is uniquely designed for agents. Real estate is a relationship business and at a time when most of our relationships exist through screens, it is more important than ever to have a tool that can enhance those interactions. ”

“Are you able to pivot where the industry is pushing you? That is so key to product nimbleness. You may not be able to find full market fit right away. Some companies may have to do a few degrees shift as the market changes so they…
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Vamshi Gunukula, COO of DirectShifts, didn’t have to search hard to find the opportunity in the global pandemic. His team found itself in the middle of the moment. DirectShifts is a tech-enabled staffing platform that matches clinicians with employers. As the need for qualified medical professionals grew, his team pivoted toward helping hospitals and clinicians source from a variety of locations. They also focused on sourcing more specialties.

“We diversified because we saw the market needed it,” Gunukula said. “We always create our product with a vision to serve certain aspects of the industry. But the industry will push you laterally. Are you able to pivot where the industry is pushing you? That is so key to product nimbleness. You may not be able to find full market fit right away. Some companies may have to do a few degrees shift as the market changes so they find their sweet spot.”

“This was an extension of my passion, but also very much trying to solve a problem. And as it turns out, it was a problem that basically every single traveler in the world has experienced or will experience some time in the future…
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Zephyr Seat is geared toward the air traveler who in this new normal seeks more private space, among other benefits. The Zephyr Seat would allow airlines to provide double-decker. lie-flat seating in a 2-4-2 configuration. CEO Jeffrey O’Neill, a frequent traveler and designer, came up with the idea after seeking a way to get some good sleep on a very long flight from at the economy price point.

“This was an extension of my passion, but also very much trying to solve a problem,” O’Neill shared with allplane.tv. “And as it turns out, it was a problem that basically every single traveler in the world has experienced or will experience some time in the future when they travel again.”

While O’Neill’s idea was born well before the pandemic in 2017, it arrives at the right time,  just travelers would appreciate isolation and social distancing. It’s poised to be a significant disrupter in the travel industry, should airlines adopt it. At this stage, the Zephyr Seat team is still hunting for the first taker. 

Hear more about how these founders are moving their products forward by joining our Product Panel on August 24. Sign up to join us in this FREE event and find out if you qualify for full membership and get insights on:

• How to pivot where the industry is pushing you with product nimbleness
• Why you should sell your meaning, not just your product
• How to extend passion to propose a solution
• Attract the attention of customers through experiences 
• It’s not about products, it’s about unmet needs

There may be no magic formula for launching the next Google, Facebook or Apple. But according to Adam Cheyer, there are a few steps founders can take to size up ideas and help to drive them towards success.  

Cheyer has a track record to back it up: As co-founder of Siri, he helped to transform the iPhone experience after Siri was acquired by Apple in 2010. He was also on the founding team at Change.org, the largest petition site in the world, and later created Viv Labs, a personal assistant software acquired by Samsung. 

Lesson #1: Playing The Long Game

Commercial success doesn’t necessarily arise from a lightbulb moment. It often takes time to cultivate, in some cases years. 

“Siri seemed to many like such an overnight success,” Cheyer says. “But the reality behind that was that it took two years of commercial hard work to get there. Before that, there was a five year research phase, during which I led technology development for the largest AI project in U.S. history researching intelligent assistants. And before that, I worked on the problem for over a decade, in both research and commercial settings.  Basically, it was something like 17 years of work from the lightbulb moment to get to the point where Steve Jobs called.” 

Lesson #2: Timing It Right

“Not every successful startup idea will take 17 years to develop — but it might take longer than founders think,” Cheyer says. One question often asked is: How do you know when is the right time to try an idea as a startup?  

It’s an important question, because if you launch too early, the world might not be ready to fully appreciate your idea — but if you launch too late, you will miss the opportunity and not catch the rising tide at the right moment.  

Cheyer uses two tools to answer this question: trends and triggers. First, he studies technology topics that are emerging at the time, and develops views about where the world is going, and what has substance versus what’s just a fad.  Once he feels he has a perspective, Cheyer waits for a “trigger” moment that confirms his prediction and gives him unique insight into what is going to happen over the next few years.  

An example? In 2004, Cheyer predicted that an interface paradigm would emerge to enable access to all the world’s content and services in a new way. When the iPhone came to market, despite many pundits predicting failure, Cheyer felt this was exactly what he had been waiting for. Looking forward two years, he posited that every handset manufacturer and telecom would be desperate for a new technology to compete with the iPhone, and he felt that Siri could be just what they needed. So he and two co-founders started a company to build it.

Lesson #3: Doing Something Big

Step three is to evaluate the size of the opportunity before deciding to invest years in developing, pitching and scaling your startup idea. A good number to keep in mind: 250. 

“It’s going to take the same amount of time to do something small as something large. So make sure you’re aiming for a market size of at least 250 million users — big companies like eBay, YouTube and Instagram are user-based. You can aim for $250 million in revenue, or you can have a differentiated technology with an application and a business model,” he adds. Why target the 250 threshold? There’s a better risk-reward profile once you get to that point, Cheyer says, with more promising prospects if your startup were to eventually get acquired. 

Lesson #4: Following the Data 

Keep your eye on the data.

“If you're not instrumenting everything you do, you're not doing it right. And if you have an advisory board, if they're not demanding to see metrics at every single board meeting, they're not doing their job.” - @acheyer
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“If you’re not instrumenting everything you do, you’re not doing it right. And if you have an advisory board, if they’re not demanding to see metrics at every single board meeting, they’re not doing their job,” he says.  

That was evident in the growth of Change.org, which wasn’t originally conceived as the world’s largest hub for petitions. As they tried many new functions on the site, the founding team followed the data of their users’ behavior to evolve what eventually became an influential platform with hundreds of millions of users. 

After Change.org launched, the site’s user counts increased initially at a relatively modest rate. That changed once the team observed high engagement with the petition feature, which was then a minor feature. Change.org was reorganized to make petitions more central, at which point the site’s users accelerated dramatically. 

“Letting the data lead you where you want to go is really important,” Cheyer says.

“Letting the data lead you where you want to go is really important.” - @acheyer
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Lesson #5: Visualizing Success

Finally, a more personal tip for entrepreneurs: Always remember to concretely visualize what success looks like — embrace it, and the ultimate outcome may wind up surprising you. 

“When we were just starting out at Siri, I walked into an Apple store and summoned up every bit of gumption I had, and thought: Someday Siri is going to be right up there on an Apple Store wall, alongside the Google, Skype and Pandora icons they were displaying,” he recalls.  It seemed outrageously ambitious to posit that his little team would create something as important as these giants of technology.

Fast forward, and on the day Siri launched, he returned to an Apple store and — to his surprise — Siri was not merely displayed as one icon among many. Next to the front door of the Apple Store, there was a sign saying “Introducing Siri”, and there was a plasma display showing Siri use cases running on a loop. This juxtaposition of the earlier image of success that Cheyer had visualized years earlier, against the even better reality presented this day, created a striking moment.

“Life often finds a way to surpass your biggest dream with a reality you couldn’t even imagine. That moment makes all the hard work completely worthwhile and satisfying.” - @acheyer
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“I just got chills,” he says. “Don’t just dream abstractly, but concretely visualize what success would look like. When you do this, life often finds a way to surpass your biggest dream with a reality you couldn’t even imagine.  And that moment makes all the hard work completely worthwhile and satisfying.” 

Register at Founders Network for Adam’s full insights on: 

• Playing the Long Game
• Timing It Right 
• Doing Something Big
• Following the Data
• Visualizing Success

• Reducing Cash Burn
• Reviewing Contracts
• Modeling Revenue
• Venture Outlook
• Non-traditional Funding

Startup founders should keep a close eye on their balance sheet even in the best of times. In a worldwide crisis, however, trimming expenses and extending your runway could be a matter of survival. 

David Ehrenberg, founder of financial services firm Early Growth, says that founders should be taking a hard look at these three things to ensure they can weather whatever storms may result from COVID-19:

1. their burn rates
2. revenue forecasts
3. and sources of funding 

Ehrenberg, a member of Founders Network since 2013, founded Early Growth in 2008, and it’s since grown into the largest financial services firm in the U.S. catering specifically to early stage startups. 

“You need to create a company and an organization that is lean enough that it can survive the next two or three years.” - @EarlyGrowthFS
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“That means taking a good look at your staffing and who’s essential, taking a look at your spending and what’s discretionary and what’s non-discretionary. It’s also about taking a look at different initiatives you have going on to see if they make sense or not.”

Aim for two to three years of runway

We may not know how long the current economic downturn may last. But startups should aim for two to three years of runway, Ehrenberg says. And there are many other ways to potentially improve your financial outlook, from reviewing contracts to exploring new sources of funding. Founders should leave no stone unturned.

“I think the biggest mistake a company can make right now is to not be acutely aware of the situation that we're in, and adjusting and planning for it appropriately.” - @EarlyGrowthFS
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“I think the biggest mistake a company can make right now is to not be acutely aware of the situation that we’re in, and adjusting and planning for it appropriately,” he says. 

Review terms and relationships

Lenders or vendors may be willing to renegotiate contracts, Ehrenberg adds.  “Founders should closely review those terms of those relationships and take advantage of opportunities to adjust or delay certain expenses.” 

“Take a look at contracts, and see what you can renegotiate and what you can get out. Take a look at any bank loans or debt that you have and renegotiate it,” he says. 

Map out your revenue

Now is also a good time, as ever, to map out what your revenue will look like in the coming quarters — and what funding you’ll need to push through stormy economic waters. There are a variety of funding sources available, from government loans and lines of credit to venture funding.  Banks and other venture debt providers are also likely to remain active throughout the crisis, according to Ehrenberg.  

Startup founders need to look at all of the available options and weigh the pros and cons.  Founders should also be aware that the available sources of financing can depend in part on their own business outlook. Venture funding is likely to get more competitive in the current environment, Ehrenberg adds. 

“One of the things that’s so hard about this situation is that we don’t have definitive data on anything, when it comes to the medical numbers or the economic numbers,” he says. “We don’t have a lot of data yet, but by the estimates that we’ve seen, there will be a decrease in venture funding of between 30% to 50%. But there’s still going to be funding going on.”

Some startups may thrive in the current environment. You don’t have to look far for examples of tech companies seeing significant growth as people work and spend time at home. Others more tied to economic cycles, or particular industries hard hit by COVID-19, will see a much greater downturn. Options for extending your runway can look different depending on what category you fall into, Ehrenberg says. Revenue-based investments may be a good option for startups with a healthy top line. But the bar may be a bit higher to get new rounds of investment flowing. 

“People are not going to just be funding based on a pitch deck. They're going to want to see real traction, they're going to want to see revenue, and they're going to want to see customer engagement and proof points.” -…
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Explore a range of options

“People are not going to just be funding based on a pitch deck. They’re going to want to see real traction, they’re going to want to see revenue, and they’re going to want to see customer engagement and proof points,” he says. “People have this idea that venture capitalists are huge risk takers. They’re not at all. They’re incredibly conservative.”

Whatever the path to weathering COVID-19, startup founders should explore a range of options and, of course, remain closely engaged with their board and existing investors to figure out the beat path forward. Founders should be aware that they may have to raise at a lower valuation, too. 

“This is a good time to think about your business model. You can always restart initiatives, but this is a time to be really conservative and make your dollars last as long as possible.” - @EarlyGrowthFS
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“It is a good time to think about your business model,” Ehrenberg adds. “You can always restart initiatives, right? But this is a time to be really, really conservative and make your dollars last as long as possible.”

Founders wanting to make a play in a major market oftentimes run into a bit of a learning curve. 

Matt Tillman, a serial entrepreneur who’s now a partner at Acrylic, knows this firsthand. After growing up in “the middle of nowhere” in rural Illinois, Tillman worked at startups in Chicago before ultimately relocating to the San Francisco Bay Area. With $140M total in exits, Matt most recently co-founded Haven, a logistics automation software that raised $24 million and attained revenue in the mid-seven figures within about 18 months of its founding in 2014.

Graduating to a major market isn’t without pitfalls, particularly for founders who may not be acclimated to doing business in a first-tier market. But Tillman has plenty of tips on how to prepare yourself, as well as the life experience to back it up. 

For starters, it helps to be aware of expectations in the market you’re heading into. And in a first-tier market like the Bay Area, those expectations may be very different from what a founder is accustomed to. 

“What a founder does is sell equity: What investors care about is, does the product have a growth opportunity in a particular market? Is the market big enough? And is it growing fast?” - @mtillman
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“The obvious analogy is: There’s minor leagues, and there’s different tiers of minor leagues, and then there’s the major leagues,” Tillman says. “You have to meet or exceed investors’ expectations. What a founder does is sell equity.”

According to Matt, the top three things investors care about are…

1. Does the product have a growth opportunity in a particular market?
2. Is the market big enough?
3. Is it growing fast?

Knowing your investor base is always paramount to successful fundraising. But that’s even more pronounced in competitive markets with a lot of capital, a lot of startups, and myriad specialized investors. It’s critical to remember that all capital is not necessarily created equal, Tillman adds.

“The challenge is the asset classes of investors are totally different,” he says “You’ve got private equity, which is totally different than a family office; you have individual investors, all sorts of things. And not all VC is actually VC in terms of their expectations around growth and outcomes.”

It takes an experienced startup founder to be able to identify and understand the distinctions between various types of investments. Fortunately, major markers have no shortage of experienced entrepreneurs with insights to share — and plenty of opportunities to connect with them through networks like Founders Network. Newer founders would be wise to take advantage of that, Tillman says. 

“You need to connect with founders because founders are the only people who have actually gone through it. If you can skip a mistake that someone else has made and get it right the first time, optimize towards that.” - @mtillman
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“You need to connect with founders because founders are the only people who have actually gone through it,” he adds. “If you can skip a mistake that someone else has made and get it right the first time, optimize towards that.”

Major markets are ripe with opportunities, but they also come with pitfalls. One is that there’s a lot of “noise” to contend with as well — and startup founders need to gauge what’s really worth their time and what’s just a distraction. 

“Maybe even more important, is throwing away all the waste that you’re subjected to: All of the VC  Twitter, the VC LinkedIn, all the VC puff pieces on TechCrunch — those are sales tools selling you on their access to capital, not even the money itself,” Tillman says. “So just skip the bullshit, otherwise you’re going to spend way too much time worrying about what Ben Horowitz thinks about you.” 

That’s a reflection of another critical skill you’ll need as a startup founder in the Bay Area or another major market: the ability to be cutthroat with your own time, and not undervaluing the minutes you might spend in your day on lower-order tasks you can skip or outsource. 

“Prioritize your time. Too many founders leave lucrative jobs and immediately place a $25 per hour value on their time.” - @mtillman
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“Prioritize your time. Too many founders leave lucrative jobs and immediately place a $25 per hour value on their time.” Tillman emphasizes. “When it comes to building your deck, or when it comes to joining a network and being able to learn from others so you can skip their mistakes, and you’re worried about $500. Instead think about the opportunity cost of, you know, an extra $1M in valuation. Which is an extra $300k for a founder, roughly. So it’s very important to value your time.”

Launching a Startup in Chicago is More Affordable

According to Nick Moran (General Partner of New Stack Ventures, fnInvestor), “Infrastructure and services costs to ‘start-up’ have dropped precipitously, however the cost for talent has grown exponentially.  As Jeff Clavier recently articulated on The Full Ratchet podcast, “The cost to launch a startup in San Francisco is far greater now than it was a decade ago.” Moran continues, “If one can launch and grow a team in cities like Chicago, they can allocate more dollars to growth, maintaining better capital efficiency.  In tech centers outside of SF and NYC, more equity value remains with the founders and employees, instead of the venture capitalists.”

Chicago makes an alluring spot for entrepreneurs. For one, Chicago has a solid and diverse business climate. Everything from aerospace and agriculture to technology and medicine has made a name for itself here. For example, two of the three founders of Groupon (originally founded in Chicago) have launched their own startups in Chicago: one a medical data company and the other an analytics company for the aviation, construction and mining industries.

Although they had enough funding to go elsewhere, there’s something to be said for  being true to your roots. In addition, there’s less reliance on venture capitalists gobbling up pieces of the business once it gains traction, plus, Chicago has plenty of talent, a startup-friendly culture and a lower cost of living. 

Chicago is Conveniently Located to Other Major Hubs

Being on the West Coast limits your options in terms of meeting with partners, networking or formulating new ideas with like-minded people across the country. On the other hand, being in the Midwest, Chicago is centrally located, making it convenient for people from both sides of the country to “meet in the middle”. 

Technology companies including Google and Facebook have satellite offices in Chicago, but Ira Weiss (General Partner of Hyde Park Venture Partners, fnInvestor) is looking for more.  Weiss notes, “The biggest companies in the world are all tech companies, and we need some of them to be built here in Chicago. 30 years ago, the biggest retailer and cell phone companies in the world were based in Chicago, called Motorola and Sears. Now instead there is Apple and Amazon. We need the next huge tech company to be built here in Chicago.”

A Unique Trifecta of Advantages

While Silicon Valley may be the apple of the technology sector’s eye, Chicago trails only New York City as one of the most attractive cities for startups. But what is it about the Windy City that’s got so many startups looking to take the plunge? According to Saurabh Sharma (Partner at Jump Capital, fnInvestor) there are three key reasons. “Chicago has unique trifecta –  i) a key business hub for various industry sectors ii) accessible to top engineering schools in Midwest and iii) hard working / hustling ethos.”

Sharma continues. “As an investor, I love that combination. I also truly believe that due to [the] above cited reasons,  and technology being more and more affordable and accessible, Chicago is as good a city as any to start a company.” While it’s true that this is a combination like no other, it’s also worth noting that these three points come together in Chicago in a way that you can’t find in other technology hotbeds. 

You can’t “buy” a city’s personality, and in addition to the access to top engineering talent, the “work hard, play hard” mannerisms of Chicagoans cannot be ignored. Chicago is a city where people are unafraid to put their noses to the proverbial grindstone and make their dreams into reality. With this drive and determination permeating the city’s culture, founders cannot help but fall in love with the city, and quickly find themselves joining many other hopefuls looking to capitalize on the city’s abundant resources, talent, skill, and growth potential. 

Here’s Your Chance to Grow Your Startup in Chicago

If you’re looking for growth opportunities for your Chicago-based startup, Founders Network wants to help. 

“Now in our 8th year, FN has grown to include over 600 lifelong members across 9 global chapters,” states Founders Network Founder and CEO, Kevin Holmes, “With the launch of our Chicago Chapter, we look forward to providing a global compliment to the local Chicago startup ecosystem by bringing together full-time tech founders to help each other raise funding, launch products, recruit top talent and unlock growth. Our Membership Committee has allocated 20 spots for full-time tech founders who exemplify FN’s core values of authenticity, reciprocity, humility and inclusivity to start off the Chapter. If you’re a full-time tech founder in Chicago who understands the important role of networks in your startup success, please join us at our Chapter Launch on Sept. 10th.”

The Launch will include a Pitch Competition featuring the Investors quoted in this article and sponsorship from Microsoft for Startups, StackPath and Winestyr, who have graciously contributed thousands of dollars in prizes to the winning founder.

“I’m thrilled that Founders Network is launching in Chicago,” said Raman Chadha,  Founder & Managing Partner of The Junto Institute, and Ecosystem Advisor for our Chicago Chapter, when asked about the launch, “Their presence strengthens our ecosystem with Silicon Valley experience, further validates Chicago’s continued growth in tech, and brings a global community for our founders to plug into. I’m proud that The Junto Institute is a partner, especially given our shared values and interests.”

Please read more about the competition and RSVP here.  We look forward to meeting you there! 

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